The Home Inspection Bait and Switch
Updated: Sep 30
Over the years, I've watched the home inspection slowly transform. What was intended as a fair and honest protection for buyers has, far too often, turned into a tactical weapon used to hold sellers hostage.
In the days of caveat emptor, meaning buyer beware, an inspection contingency was a simple safety net. It was there to keep a buyer from buying a money pit with a cracked heat exchanger, dry rot behind the siding, or a leaking underground oil tank. Back then, it was mostly about fairness and preventing costly unknown expenses.
Today, not so much. Now, it's less about fairness and more about setting up round two of price negotiations.
We all know how to do it, if we wanted to.
The Bait
The buyer submits a high, eye-catching price, often well above asking, to beat out competing offers and get the seller to tie up the property. They make the terms look solid on paper, knowing full well the seller is looking at the top-line number and dreaming about their net proceeds. Once the contract is signed and the status flips to pending, the buyer has effectively removed all other competitors and taken control of the deal.
The Switch
Once the inspection report arrives, the tone changes completely. Minor maintenance items, normal wear and tear, and aged components suddenly get framed as major defects. The buyer presents a laundry list of demands, threatening to walk unless the seller grants steep price reductions or hefty closing cost credits. The buyer never intended to pay the original contract price; they just used it to corner the seller, where walking away feels too costly.
So much for "good faith" bargaining. Submitting an artificially inflated offer with every intention of renegotiating it under the guise of an inspection report isn't good-faith bargaining. It's bad faith, pure and simple, and it undermines the integrity of the transaction for everyone involved. But this, by most standards, is what is expected today.
A listing agent's job is to help prepare sellers for this tactic, to protect their net proceeds, help them understand that price should not always be the deciding factor, and keep the deal on track to closing. Neutralizing this play requires shifting the leverage back to the seller's side before the buyer even thinks about turning the inspection into a shakedown. These are a few ways to help with that:
Secure Backup Offers: The moment a buyer realizes there’s a lineup of backup offers, their "leverage" to collect the ransom vanishes overnight.
Control the Sign Post: Don't hang that "Pending" rider until the inspection contingency is completely waived. Leaving it off keeps the buyer and their broker on notice that you know the deal isn't done yet. If you really want to hang a rider, how about this one: "Accepting Backup Offers."
Counter with a Strict "Pass/Fail": If you suspect a buyer is bidding high just to beat the crowd, write a strict Pass/Fail contingency into your counter-offer. The buyer gets their full right to inspect, but the deal is strictly take-it-or-leave-it. Statutory law commands the seller and brokers to reveal what they know, but the negotiated contract says what can be inspected and what gets disclosed as a result of the inspection. In places like Oregon, state forms already protect sellers from having unwanted reports dumped in their lap, but enforcing a clean Pass/Fail takes it a step further by shutting down subsequent disclosures from inspections, thereby lessening the buyer's leverage.
Make a Clean Cut: Sometimes the best strategy is to just say "No." When demand is high, serious buyers are often more than willing to waive the inspection contingency to secure the home.
Set Expectations During Offer Presentation: When presenting a high-flying offer, remind your seller that an offer price is only a placeholder price until contingencies are cleared. Probe the buyer's agent on their buyer’s expectations regarding the home, its age, condition, and their motivation and expectations for the inspection before accepting the offer.
Define the Scope Upfront: Make sure the buyer’s agent understands early that the inspection contingency is meant for systemically major defects, not a punch-list for cosmetic upgrades or normal wear-and-tear.
If you aren't protecting your seller from the home inspection shakedown, you aren't managing their transaction; you're just holding the door open for the bait and switch play.
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Until soon enough,
Jeff.
Championing the Human Parts of Real Estate Since 1979™
ABOUT THE AUTHOR: I am a self-retired real estate professional with a career spanning 47 years. Throughout decades of market changes, I remained dedicated to the idea that real estate is about more than square footage—it’s about the human element. Today, I write about the lessons learned from a lifetime of helping people find the place that truly feels like home, hoping that sharing these insights will help the next generation of agents better serve their clients and find fulfillment in their own careers.
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